posted on Aug, 25 2008 @ 01:26 PM
reply to post by 38181
There are alot of variables involved as to whether it's possible or feasable. The first being if the loan is recourse or non-recourse. On a
non-recourse mortgage it's really possible to walk away, basically you quit paying and the bank gets the collateral (the house) and that's pretty
much it. Of course your credit is trashed with a foreclosure on it, but that is pretty much it with a non-recourse loan. Most first money purchase
mortgages are non-recourse in most states, including California.
Refinances, investment properties, second homes, etc are usually recourse. To my understanding even with a recourse loan, the forcloser must persue a
judicial forclosure, which is more expensive and time consuming than a non-judicial forclosure if allowed.
The best advice for anyone thinking about "jingle mailing" the keys back is this. Consult both an attorney and tax professional for possible
repercusions of that action.
I hear tons of people showing "moral outrage" that people are walking away from mortgages. I say why? Does not the mortgage contract have a
provision for failing to pay, ie forclosure? Do the same people show the same moral outrage when the CEO/Board of a public company declares BK ,due to
whatever reason,stiffing it's creditors get the same outrage. There is also the law of unintended consequences. The revisions to the bankruptcy laws
a few years ago have made it easier to walk away from a non-recourse mortgage than to discharge credit card debt.